Question

VInce Corporation's December 31, 2017 balance sheet showed the following:

6%preferred stock, $20 par value cumulative,30,000 shares authorized;20,000 shares issued. $400,000

Common Stock $10 par value, $3,000,000 shares authorized;1,950,000 shares issued, 1,920,000 shares outstanding 19,500,000

Paid-in capital in excess of par value - preferred stock 60,000

Paid-in capital in excess of par value - common stock 28,000,000

Retained earnings   9,650,000

Treasury stock (30,000 shares) 630,000

a) calculate the total Paid in Capital

b) Calculate the total Stockholders Equity

c) Calculate the treasury stock per share

d) Calculate the Preferred Stock dividend

e) If the Vince Corporation declared and paid an $35,000 dividend on December 31, 2017. How much will preferred stockholders receive? How much will common stockholders receive?

Thanks for the help.

Answer 1

Requirement a:

Paid-in capital:
Preferred stock	$400,000
Common stock [1,950,000 shares issued x $10 par]	$19,500,000
Paid-in capital in excess of par value - Preferred stock	$60,000
Paid-in capital in excess of par value - common stock	$28,000,000
Total Paid in capital	$47,960,000

Requirement b:

Stockholder's equity
Paid-in capital:
Preferred stock	$400,000
Common stock [1,950,000 shares issued x $10 par]	$19,500,000
Paid-in capital in excess of par value - Preferred stock	$60,000
Paid-in capital in excess of par value - common stock	$28,000,000
Total Paid in capital	$47,960,000
Add: Retained earnings	$9,650,000
Total paid in capital and retained earnings	$57,610,000
(Less): Treasury stock	($630,000)
Total stockholders' equity	$56,980,000

Requirement c:

Treasury stock per shares = $630,000 cost of treasury stock ÷ 30,000 treasury shares = $21 per share

Requirement d:

Preferred stock dividend = Outstanding preferred shares x par value x 6%

= 20,000 x $20 par x 6%

= $400,000 x 6%

= $24,000

Requirement e:

Preferred shareholders will receive	$24,000
Common shareholders will receive [$35,000 total-24,000 preferred]	$11,000